When post-grant proceedings under the America Invents Act began, the USPTO's Patent Trial and Appeals Board ("PTAB") treated motions to amend in those proceedings like most other motions:  the movant, here the patentee, bore the burden of production of evidence and the burden of persuasion on the issue of patentability of the proposed substitute claims.  Then, the Federal Circuit's decision in Aqua Products[1] in 2017 made it clear that there was no such rule allocating the burden of persuasion.  Since then, the PTAB has required the petitioner in post-grant proceedings to persuade it that the proposed amended claims are not patentable.  The USPTO now seeks to codify that standard in its regulations, amending the rule only to allow itself discretion in rare circumstances.

The proposed regulations (37 CFR §§ 42.121 and 42.221) include three basic points.  First, the patentee will still bear the burden of persuasion by a preponderance of the evidence on certain procedural points:  that there are a reasonable number of substitute claims, that the amendment does not broaden the scope of the claims, that there is written description support for the new claims, and the like.  Second, the petitioner will then bear the burden of proof to show by a preponderance of the evidence that the proposed substitute claims would be unpatentable.  Third, the PTAB retains discretion to grant or deny any motion to amend in the interests of justice, so long as the reason for its decision is supported by the evidence of record.

The road to the proposed regulations started with the Federal Circuit's Aqua Products case.[2]  Although the Court was fractured, Judge O'Malley explained in the lead opinion the points of general agreement:

The only legal conclusions that support and define the judgment of the court are: (1) the PTO has not adopted a rule placing the burden of persuasion with respect to the patentability of amended claims on the patent owner that is entitled to deference; and (2) in the absence of anything that might be entitled deference, the PTO may not place that burden on the patentee.

872 F.3d at 1327.  In a separate opinion -- also joined by a majority of the judges -- Judge Reyna noted that the lack of any rule on the burden of persuasion did not extend to the burden of production:

There is no disagreement that the patent owner bears a burden of production in accordance with 35 U.S.C. § 316(d).  Indeed, the Patent Office has adopted regulations that address what a patent owner must submit in moving to amend the patent.

Id. at 1341.  Thus, Aqua Products found that the patentee had been assigned the burden of production on motions to amend, including with regard to the formalities set forth in the regulations.  However, it found the patentee did not bear the ultimate burden of persuasion on patentability.

The PTAB then brought its decisions in line with the Federal Circuit's holdings and placed the burden of persuasion on the petitioner in post-grant proceedings.  However, it made it clear that the "Board itself may justify any finding of unpatentability by reference to evidence of record in the proceeding," such as when the petitioner has stopped prosecuting the case due to settlement.  See Western Digital Corp. v. SPEX Techs., Inc., Case Nos. IPR2018-00082, -00084 (P.T.A.B. Apr. 25, 201) (Paper 13).  The USPTO also sought comments from the public on two questions related to the burden of proof for motions to amend.  First, should it engage in formal rulemaking to codify its decision in Western Digital?  Second, if the burdens are allocated as set forth in Western Digital, when should the Board itself act to justify unpatentability?

The USPTO received 49 comments, 25 of which provided specific answers to the questions it posed.  The vast majority of the specific responses were in favor of rulemaking, and a smaller majority suggested that the rules should mirror the Western Digital decision.  Similarly, a substantial majority believed that the PTAB should not be limited to any specific posture of the proceedings in which to exercise discretion on patentability.  However, two believed that the PTAB should never be permitted to exercise discretion and three believed that it should only be permitted to do so in certain factual scenarios (such as when the petitioner stops participating).

Thus, the USPTO promulgated the draft rules.  In doing so, it suggested that the PTAB will rarely exercise its discretion to find a lack of patentability on its own, most likely when the petitioner stops participating (including due to settlement) or when it does not oppose the motion to amend.  Importantly, however, the reasons for refusing an amendment must already appear in the record and be in the interests of justice.  On the other hand, even if the patentee fails to make its required showings in its motion to amend, the PTAB can exercise its discretion to allow amendment in the rare situation it believes justice suggests it do so if the evidence needed to permit the amendment is already in the record.

The draft rules are open for comment until December 23, 2019.  Given Director Iancu's push to make amendment a viable option in post-grant proceedings, however, it is likely that they will be adopted relatively quickly and in similar form to the draft rules.

[1] Aqua Prods., Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017) (en banc).

[2] A complete summary of the Aqua Products case can be found at https://www.patentdocs.org/2017/10/aqua-products-inc-v-matal-fed-cir-2017.html